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LONDON-Average prime office rents in the main European business locations fell back by 0.4% during the third quarter of 2001, indicating that market confidence was fragile even before 11 September, according to a new survey by CB Hillier Parker. This is the first time that rents have fallen since 1996, and follows on from a sharp decline in the rental growth rate during the second quarter of the year.

Rents in most centres are now static, but falls have been registered in a number of key locations including Stockholm; Frankfurt; Berlin; Hamburg; Madrid; Edinburgh and the West End of London. Outside the core EU centres, performance has been even more erratic, and Tel Aviv, Israel, saw a 10.5 per cent slump in rents over the quarter.

However, the survey found a few centres where rents are continuing to grow, including Barcelona; the City of London; Manchester and Moscow. And Harare, Zimbabwe registered a 23 per cent rent rise in three months, reflecting the impact of hyperinflation.

Take-up figures show the full impact of declining occupier confidence, and in many locations take-up was 40 per cent down year-on-year. Central London has seen the biggest slump, with 2.33 million sf taken up during the third quarter of 2001, against 6.14 million sf in the equivalent period a year previously. Brussels witnessed a 55 per cent slump from 1.7 million sf to an estimated 775,000 sf while Paris saw a 33% decline from 6.89 million sf to 4.75 million sf.

And according to experts at CB Hillier Parker there could be worse to come as the full impact of 11 September and the ensuing war is felt. Nick Axford, Head of EMEA Research and Consultancy at CBHP said: ‘Whatever the long-term impact of the 11 September attacks, the property sector is likely to experience considerable short-term pain. Occupiers will be putting off decisions until the economic and political situation is clearer and the full implications for the property market are unlikely to be evident until at least the middle of next year.’

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